Commonwealth Scientific and Industrial Research Organization (CSIRO), driest
scenario
National Centre for Atmospheric Research (NCAR), wettest scenario
Note: Projections are based on the A2 scenario of the IPCC Special Report on Emissions Scenarios (SRES). The Economics of Adaptation to Climate Change study team acknowledges the Program for Climate Model Diagnosis and Intercomparison and the World Climate Research Programme's (WCRP) Working Group on Coupled Modelling for their roles in making available the WCRP’s Coupled Model Intercomparison Project phase 3 (CMIP3)
multimodel dataset. Support of this dataset is provided by the Office of Science, U.S. Department of Energy.
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Source: Maps are based on data developed at the MIT Joint Program for the Science and Policy of Global Change using CMIP3 data (the WCRP’s CMIP3) multimodel dataset. Maps were produced by the International Food Policy Research Institute.
Large-scale discontinuities create even greater uncertainty. Most uncertain are risks related to systemic changes, such as the melting of the Greenland and West Antarctic ice sheets, the collapse of the Atlantic thermohaline circulation, and the die-back of the Amazon, all hard to predict and subject to sudden threshold changes that can trigger potentially irreversible processes. The precise timing and level of these triggers cannot be projected with confidence, but the science is clear that these risks are substantial.
Such inherent uncertainties in climate projections suggest that a range of adaptation costs should be estimated for a range of climate scenarios. They also suggest that policymakers will have to hedge when making decisions with long-term consequences, weighing the current costs of investments against their benefits over a wide range of potential climate outcomes (see box 4).The EACC has calculated the range of adaptation costs over wet (CSIRO) and dry (NCAR) scenarios to bracket adaptation costs between the two extreme scenarios. In the real world, where decisionmakers must hedge against a range of outcomes, actual expenditures are potentially much higher than these estimates.
Box 4. Taking climate uncertainty into account: how should national policymakers interpret global numbers?
Total adaptation costs for a specific climate projection are an estimate of the costs the world would incur if policymakers knew with certainty that that particular climate projection would materialize. But national policymakers do not have such certainty. At present, climate scientists agree that no climate model projection can be considered more likely than another. The current disparities in precipitation projections mean, for example, that ministers of agriculture have to consider the risks of both the wettest and the driest scenarios and thus whether to invest in irrigation to cope with droughts or in drainage to minimize flood damage, while urban planners in flood-prone areas have to decide whether to build dikes (and how high) without knowing whether the future will be wetter or drier.
The EACC has calculated the range of adaptation costs over wet (CSIRO) and dry (NCAR) scenarios to bracket adaptation costs between the two extreme scenarios. This provides a range of estimates for a world in which decisionmakers have perfect foresight. In the real world, where decisionmakers must hedge against a range of outcomes, actual expenditures are potentially much higher than these estimates. With such high costs involved, improving the certainty of the climate model projections is urgent, as are strategies that permit decisionmakers to remain flexible until better climate information is available.
Summing potential costs and benefits
This study estimates adaptation costs relative to a baseline of what would have happened in the absence of climate change. One possible outcome is that changes in climate lead to lower investment or
expenditure requirements for some sectors in some countries—for example, changes in demand for electricity or water that reduce requirements for electricity generating capacity, water storage, and water treatment. In these cases, the “costs” of adaptation are negative. This is straightforward, but it gives rise to
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another question: how should positive and negative costs be summed across sectors or countries? It is easy to envisage that higher expenditures on coastal protection could be offset by lower expenditures on electricity generation in the same country, but it is unlikely that higher expenditures on electricity
generation in country A can be offset by lower expenditures in the same sector in country B.3 How then to define aggregates that add up consistently across sectors and countries?
Box 5 illustrates three options for summing positive and negative costs when there are restrictions on offsetting negative and positive items: gross, net, and X-sums. Under the gross aggregation method, negative costs in any sector in a country are set to zero before costs are aggregated for the country and for all developing countries. Under X-sums positive and negative items are netted within countries but not across countries, and costs for a country are included in the aggregate as long as the net cost across sectors is positive for the country. In the net aggregate measure, negative costs are netted within and across countries. The net calculation is carried out by decade. Of 146 developing countries, 10 have negative net adaptation costs in at least one decade across all sectors with the CSIRO scenario and 5 with the NCAR scenario. Most of these countries are landlocked, buffering them from the substantial costs for coastal protection that constitute a large part of the adaptation costs for coastal countries.
All three options are used in the study to estimate adaptation costs, though costs are mainly reported as X- sums in the interest of space.
3 A simple example helps to illustrate the situation. Suppose that Brazil has a positive cost in both
agriculture and water, meaning that both sectors will be negatively affected by climate change (relative to the no-climate-change scenario), and suppose that India has a negative cost in agriculture and a positive cost in water, meaning that agriculture benefits but the water sector suffers from climate change. It may be reasonable to assume that in India the gains in agriculture can compensate to some extent for the losses in the water sector. But it is unlikely that Brazil will be compensated by India because Brazil incurs a cost and India a benefit in the agriculture sector.
27 Box 5. Calculating aggregate costs—gross, net, and X-sums
In summing positive and negative adaptation costs across countries, whether for a single sector or all sectors, three types of aggregate can be constructed (as illustrated by the hypothetical figures in the table).
Summing positive and negative adaptation costs Sector and
type of aggregate
Country Sector aggregate
A B C
Sector
gross Sector net
Sector X- sum
Sector 1 2 2 2 6 6 —
Sector 2 8 –4 –2 8 2 —
Sector 3 2 6 –4 8 4 —
Country gross 12 8 2 22 — —
Country net 12 4 –4 — 12 —
Country X-sum 12 4 0 — — 16
— is not applicable.
Gross sum. The gross sum represents the aggregate costs incurred by countries with positive costs for a particular sector, ignoring all country and sector combinations resulting in negative costs. One difficulty with gross sums is that the results vary depending on how sectors are defined. This can be illustrated by recalculating the gross sums after combining sectors 1 and 2, giving an overall sectoral gross sum of 18 rather than 22, even though nothing else has changed (not shown in table).
Net sum. The net sum treats positive and negative values symmetrically. It represents the pooled costs incurred by each country or each sector without restrictions on pooling across country borders.
X-sum. X-sums take account of restrictions on pooling across countries, so all entries for a given country are set to zero if the net sum for the country is negative (see country C in the table).
For the hypothetical data in the table, the overall gross sum is 22, and the overall net sums is 12. The difference between the two values is the absolute value of negative entries for sectors 2 and 3 in countries B and C. The overall X-sum, which must fall between the overall gross and net sums, is 16.
The difference between the overall X-sum and the overall net sum is 4, equal to the loss of pooling because of the net negative cost for country C.
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